The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [495]
This winnowed-down list was so short that it could be contained on a single piece of legal-size paper. Sitting down with a visitor, he held out the list, which consisted of at most a couple of dozen companies. A few were large—among the largest in the world—but most were very small.
“Lookit,” he said, “this is how I do it. They are quoted in won. If you go to the Internet and look them up on the Korean stock exchange, they have numbers instead of ticker symbols, and they all end in zero unless it’s a preferred stock, in which case you click in five. If they have a second class of preferred, you don’t click in six, you click in seven. Every night you can go on the Internet at a certain time and look up some issues and it’ll show you the five brokerage firms that would have been the largest buyers and the five that would have been the largest sellers that day. You have to set up a special account with a bank in Korea. That’s not easy to do. I’m learning it as I go along.
“It’s like finding a new girl to me.
“These are good companies, and yet they’re cheap. The stocks have gotten cheaper than five years ago, and yet the businesses are more valuable. Half of the companies have names that sound like a porno movie. They make basic products, like steel and cement and flour and electricity, which people will still be buying in ten years. They have a big market share in Korea, which isn’t going to change, and some of these companies are exporting to China and Japan too. Yet for some reason, they haven’t been noticed. Look, this flour company has more than its market value in cash, and it sells at three times earnings. I couldn’t buy very much, but I got a few shares. Here’s another one, a dairy. I could end up with nothing but a bunch of Korean securities in my personal portfolio.
“Now, I’m no expert on foreign currencies. But I’m comfortable owning these securities denominated in the won right now.
“The main risk, and part of why the stocks are cheap, is North Korea. And North Korea is a real threat. If North Korea invaded South Korea, the whole world could go to hell. China, Japan, all of Asia would be drawn into a war. The consequences are almost unimaginable. North Korea is very close to having nuclear weapons. I regard it as one of the world’s most dangerous countries. But I would make the bet that the rest of the world, including China and Japan, are simply not going to let the situation get to the point that North Korea makes a nuclear attack on South Korea anytime soon.
“When you invest, you have to take some risk. The future is always uncertain. I think a group of these stocks will do very well for several years. Some of them may not do well, but as a group, they should do very well. I could end up owning them for several years.”
He had found a new game, a new puzzle to figure out. He wanted more of them and kept looking for opportunities with the same eagerness he’d once shown stooping for winning tickets at the racetrack.
In December 2005, in a talk at the Harvard Business School, he was asked about his hopes for the Buffett Foundation’s impact on society, since it would someday become the best-funded philanthropy in the world. Buffett responded that his guess was that he was not doing society as great a favor by compounding any more. So he was thinking more these days about giving the money away.
Nobody said anything. Nobody seemed to realize that Buffett had just signaled a total shift in direction.
Later, in the same speech, he talked about the Gates Foundation. He admired Bill and Melinda Gates more than any other philanthropists, he said. Theirs was the most rational and best executed of any foundation policy he had ever seen. And he liked that they didn’t want publicity for their philanthropy, did not want their name on any buildings.
By early 2006, his